Finance Keywords

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  • Finance Keywords
    • Start-up Capital
      • the finance needed by a new business to pay for essential fixed and current assets before it can begin trading.
    • Working Capital
      • the finance needed by a business to pay its day-to-day costs
    • Capital Expenditure
      • is money spent on fixed assets which will last for more than one year.
    • Revenue Expenditure
      • money spent on day-to-day expenses which do not involve the purchase of a long-term asset
        • for example wages or rent
    • Internal Finance
      • is obtained from within the business itself
    • Micro-Finance
      • is providing financial services - including small loans - to poor people not served by traditional banks.
    • Cash Inflow
      • are the sums of money received by a business during a period of time
    • External Finance
      • is obtained from sources outside of and separate from the business
    • Cash Outflow
      • the sums of money paid out by a business during a period of time
    • Cash Flow
      • the cash inflows and outflows over a long period of time
    • Cash Flow Cycle
      • shows the stages between paying out cash for labour, materials etc. and receiving cash from the sale of goods
    • Cash Flow Forecast
      • an estimate of future cash inflows and outflows of a business, usually on a month-by-month basis.
        • This then shows the expected cash balance at the end of each month.
    • Profit
      • is the surplus after total costs have been subtracted from sales revenue
    • Opening cash balance
      • is the amount of cash held by the business at the start of the month
    • Accounts
      • the financial records of a firm's transactions
    • Closing balance
      • the amount of cash held by the business at the end of each month. This becomes next month's opening balance
    • Net cash flow
      • the difference, each month, between inflows and outflows
    • Accountants
      • the professionally qualified people who have responsibility for keeping accurate accounts and for producing the final accounts
    • Final accounts
      • produced at the end of the financial year and give details of the profit or loss made over the year and the worth of the business
    • Income Statement
      • document that records the income of a business and all costs incurred to earn that income over a period of time.
        • It is also known as a profit and loss account
    • Cost of goods sold
      • the cost of producing or buying in the goods actually sold during a time period
    • Trading account
      • shows how the gross profit of a business is calculated
    • Sales revenue
      • the income to a business during a period of time from the gsale of oods or services
    • Net Profit
      • the profit made by a business after all costs have been deducted from sales revenue.
        • It is calculated by subtracting overhead costs from gross profits.
    • Deciprication
      • is the fall in the value of a fixed asset over time
    • Retained profit
      • the net profit reinvested back into a company, after deducting tax and payments to owners, such as dividends
    • Balance sheet
      • shows the value of a business's assets and liabilities at a particular time. Sometimes referred to as "statement of financial position"
    • Assets
      • those items of value which are owned by the business. They may be fixed or short term.
    • Liabilities
      • debts owned by the business
    • Non current assets
      • are items owned by the business for more than one year.
    • Current assets
      • owned by a business and used within one year
    • Non-current liabilities
      • are long term debts owed by the business
    • Current liabilities
      • are short-term debts owed by the business
    • Liquidity
      • the ability of a business to pay back its short-term debts
    • Capital employed
      • shareholders' equity plus non-current liabilities and is the total long-term and permanent capital invested in a business
    • Illiquid
      • that assets are not easily convertible into cash
    • Gross Profit
      • when sales revenue is greater than the cost of goods sold

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